The purpose of this Mentored Research Scientist Career Development Award (KO1) is to become an independent researcher prepared to make a unique and significant contribution to our understanding of the impact of depression and functional impairment on health services use and expenditures among older adults (age 65+). Three themes characterize my background: (a) work-related positions with an exclusive or major focus on the aged; (b) exposure to and involvement with late life mental health; and (c) expertise in crosssectional analysis of healthcare use and expenditures. My past scientific history has focused on innovative intervention studies of elderly patients. I will receive the needed training and conduct mentored research at the University of Rochester, with additional study at the University of Michigan and training and mentored research at Cornell University. Presently little is known about the impact of depression and functional impairment on healthcare use and expenditures among most categories of elderly patients (e.g., primary care patients, home care patients, and community-dwelling high users of medical care). The Training Objectives of my Research Career Development Plan are to: (1) Improve my knowledge base in relation to affective illness, cognitive dysfunction, and chronic illness comorbidity and disability in elderly persons; (2) Increase my knowledge of mental health oriented community-based interventions and public health models; (3) Add to my knowledge and skills in longitudinal data analysis; (4) Become more familiar with the requirements for responsible conduct of research involving human subjects; and (5) Plan, organize, and carrying out a systematic research program adding knowledge of geriatric mental health and function to my expertise and skills in Health Services Research and community-based geriatric interventions. The Specific Aims of the Research Plan are: (Aim 1) To better understand the impact of major and subsyndronml depression on certain specific types of healthcare use and expenditures; (Aim 2) To better understand the effect of functional impairment (deficits in activities of daily living, instrumental activities of daily living, and ambulation/-mobility) on certain specific types of healthcare use and expenditures; and (Aim 3) To study the role of depression as a mediator between functional impairment and use/expenditures, and functional impairment as a mediator between depression and use/expenditures. The Analytic Plan consists of (a) bivariate associations, (b) regression analyses, (c) an examination of direct and indirect effects, and (d) longitudinal analyses applied to data from 3 studies: (1) the Medicare Primary and Consumer-Directed Care Demonstration (2) the Depression Outcome in Primary Care Elderly study, and (3) the Depression in Elderly Medical Homecare Patients study. Given the expected continuing rise in healthcare costs and the high prevalence of depression and functional impairment among the chronically ill aged, understanding the impact of depression and functional impairment on healthcare use and expenditures is of particular public health importance.